Businesses face a plethora of risks; some are speculative where there is a chance of loss or gain such as currency movement and some are pure risks where there is no chance of gain e.g. your building either remains undamaged or it is burnt down by fire. Only pure losses are insurable. 

Many SMEs are exposed to insurable risk but do not identify that they are in fact self-insuring most of exposures faced. This is because commercial insurers and agents tend to concentrate on what is generally available in the commercial market-place and place little emphasis on other areas. That restricts the risks to be covered and the structure of the insurance being offered.

By taking an ERM approach an SME can identify risks that are not insured commercially and may choose to consider alternative funding for such risks such as a captive insurance company.  A captive insurance mechanism may also help spread risk and reduce volatility and cash-flow for certain types of risk.

Example of risks typically self-insured may include deductibles and exclusions on existing commercial policies, product warranty/liability, food borne illness, reputational risk, supply chain disruption, construction defect, mold, subsidence, employment practices, sexual harassment, credit risk associated with accounts receivable, government and administrative actions, disability, earthquake, wind and weather, etc.

By conducting an in-depth review of the business, a risk advisor can assist with the identification and analysis of risks faced by a particular organization and can provide help in controlling, minimizing and funding for the eventualities of risks faced. For those pure, fortuitous risks identified insurance may be a solution.